China’s coal-fired power generation is projected to rebound in 2026, reversing its first decline in a decade.
The world’s largest power consumer is facing a stubborn contradiction: while it aims to decarbonize, its energy appetite is growing faster than its clean energy infrastructure can support. In the first five months of the year, China increased its usage of thermal power—primarily coal—by 3.4% year-on-year to 2.53 trillion kilowatt-hours (kWh).
Coal Projections and the 2026 Rebound
Analysts expect a meaningful return to coal dependency. Consultancies S&P Global Energy and Wood Mackenzie forecast coal-fired power will rebound by 1.5% to 2%, respectively, reaching 5.4 trillion kWh in 2026. Meanwhile, data analytics firm Kpler predicts that coal consumed in the power sector will rise by 3% to 2.7 billion tons, as reported by Reuters.
This shift is partly a result of strategic pivots in fuel sourcing. Coal is stepping in to fill that gap.
Rising prices have relegated gas to a peak load supplier, meaning it is only dispatched during extreme demand spikes, according to Sharon Feng of Azure International.
El Niño and the Hydropower Gap
Weather volatility is complicating the transition. El Niño is expected to drive higher-than-normal temperatures this summer, spiking air conditioning use. More critically, the weather pattern may reduce rainfall in southwestern hydropower hubs.
Yuxi Wang, an analyst at Wood Mackenzie, noted that this rainfall deficit would force hydropower-importing provinces with high demand—specifically Guangdong, Jiangsu, and Zhejiang—to rely more heavily on fossil fuels.
This creates a double bind: a rebound in manufacturing exports is boosting industrial power demand at the exact moment natural water sources for electricity are dwindling.
Renewable Lag and the ‘Lock-in’ Effect
China has made rapid strides in green energy. After Xi Jinping announced a goal of carbon neutrality by 2060 in 2020, the country targeted 1,200 GW of wind and solar capacity by 2030—a milestone it reached early in 2024. By mid-2023, renewables actually overtook coal in total capacity.
However, capacity does not equal generation. Matt Owen of the think tank Ember explains that for fossil-power generation to drop, clean energy growth must exceed overall power demand, which is likely to rise by 5% or more this year.
“Many coal power plants rely on medium- and long-term contracts to secure high annual generation volumes, which makes it harder for renewables to displace coal.”
Qi Qin, analyst at the Centre for Research on Energy and Clean Air
Tourism as a Parallel Strategic Asset
While the energy sector struggles with decarbonization, Beijing is aggressively leveraging other sectors to project strength and attract capital. Tourism has been repositioned as a tool of diplomacy and soft power to bridge cultural gaps and reduce misunderstandings.
| Metric | Projected Impact |
|---|---|
| National Economy Contribution | trillions |
| Jobs Supported | millions |
| Annual GDP Contribution (Next Decade) | trillions |
This strategy aims to diversify economic growth beyond traditional industries, stimulating development in rural regions and supporting small and medium-sized enterprises.
The tension remains in the infrastructure supporting this growth. The very high-speed rail networks and urban centers that attract tourists are part of an electrified economy that continues to drive the power demand fueling the coal rebound. Whether China can synchronize its soft-power ambitions with its hard-energy constraints remains the central uncertainty for its 2060 neutrality goal.
